 I was born in Argentina, and Argentina is a lot of experiments in crisis, so we had crisis, okay, every 10 years we have major crisis, currency crisis, sovereign defaults, banking crisis, and this has not been just in the 2000s, but over the years we have had many cycles of bumps and busts. We have hyperinflation episodes where you really suffer, and so you are interested in trying to explain these issues. I'm Graciela Kaminski, I work at George Washington University, and I'm a grantee of INET. In the last several years I've been constructing a database on capital flows to every country in the world, starting with the end of the Napoleonic Wars. Why this is important? In general we have the second episode of financial globalization starts in the 1970s, and so for some of the issues that we want to respond to answer to, it's a very short period of time, and so comparing what capital flows did before and now is very important for understanding issues such as the effects of monetary policy in the financial center. In general my database captures data on all the major instruments on bonds and loans and equities that are floated in the financial center for the first episode of financial globalization that ended in 1931 to this episode. Then for this paper I was interested in examining two different types of capital flow cycles, idiosyncratic versus systemic episodes, because we have had the crisis in 2008, and the crisis in 2008 was a major crisis that affected capital flows around the world, so many in the literature have concluded that capital flow cycles around a panic in the financial center are much more pronounced, bonanzas are much larger, and when the crisis in the financial center explodes there is a sudden stop and nobody can tap international capital markets. This is just one experience because in general financial panics in the center are very rare, so we are just looking about about just one event, so it's important to have many different events to examine what are the characteristics of those cycles. That's why I look at the first episode of financial globalization that has many crises in the financial center and I compare what happens across the two episodes of financial globalization. In general what I find is that in the first episode of financial globalization cycles are very pronounced when there is a crisis in the financial center. There is a lot of borrowing before the crisis starts and then when the crisis starts in the financial center there is no liquidity in international capital markets and countries in the periphery cannot borrow at all, so you have very pronounced bonanzas, a lot of borrowing and sudden stops in the aftermath. What I find in the second episode of financial globalization that these systemic cycles are very different because now when the financial center in this case the United States it has the ability to carry on cyclical monetary policy. In the first episode of financial globalization financial centers couldn't do that because they were under the gold standard and so you cannot do independent monetary policy. They cannot do cyclical monetary policy. Now they can do that. You can see that sometimes the Fed is tightening monetary policy, sometimes it's easy. What I find is that when there is a problem, a financial problem in the center, let's say in this case the United States, monetary policy not only cyclical but it's also time-varying. It's much more drastic. So the hikings and interest rates before the crisis erupts are very much more pronounced than in other cycles and when the crisis bursts what you have is very expansionary monetary policy. You have seen in this episode that interest rates decline a lot and then there was a monetary expansion not seen for 200 years. That policy stabilizes the cycles because it captures bonanzas because you hike interest rates a lot and when the crisis at birth and everybody is in a bust you eat a lot and there is a lot you inject a lot of liquidity and so not just investors in the financial centers can borrow by countries in the periphery can borrow too and so they don't leverage, they get a lot of loans from international capital markets. I find that monetary policy in the financial center when there is a crisis in the financial center is that it stabilizes the financial cycle but when you look at the real cycle it doesn't change much from the first episode of financial globalization to the second one. There is a lot of stabilization but still for example when you compare what happens after the crisis in 2008 that there was a global downturn that lasted for basically 10 years. It's very similar to the downturn in economic activity in the periphery and the financial centers during the first episode of financial globalization so the question is that is macro policy stabilization working or not so this opens a question mark. For the time being I'm just examining questions issues that someone else couldn't examine because you didn't have the data so now I'm thinking of looking at the very interesting question that is whether this database has both private issuance and sovereign issuance. We didn't know anything about what the private sector was borrowing during the first episode of financial globalization so one thing that I'm interested in is whether borrowing by the sovereign creates a market for the private sector to borrow in international capital markets or whether when the sovereign borrows a lot the private sector cannot borrow is crowding out the private sector because there is maybe like a threshold that countries cannot borrow much more than something because the private sector is going to know that they are going to default so it may be crowding out too much borrowing of the private sector can be crowding out borrowing by the private sector that's something that I'm starting a process that I'm starting right now.